I’m still using motorpool to get to and from work. Arabic class is two days a week, so I work from home those days. It just doesn’t make sense for me to hire a full time driver yet when I’d only be using him three days a week. So until I’m done with Arabic, which I doubt I’ll truly ever be as long as we’re living in the region, the motor pool drivers kindly get me to and from work. I spend a fair amount of time with these guys so I make a point to get to know them a bit. Interestingly, all of the drivers are foreign nationals – Ethiopian, Filipino, Sri Lankan, Djiboutian, Yemeni, and more. Some of them have their families in Riyadh, but others keep their families back home. Fortunately the US government takes very good care of them and, from the drivers I've ask, all intend to spend the rest of their working days at the US embassy. It’s a coveted job. It warms my heart that the drivers are happy taking care of the embassy employees and family members. And I’m really proud that our government takes such good care of them.
Often the drivers speak about the expat situation in KSA and how thankful they are to be working at the US Embassy. I’m not surprised that many choose to keep their families back in their home country. Really the only reason expats come to KSA is to work. If you’re lucky enough to get a coveted Embassy job then it’s a comfortable salary and with benefits, for their family to live comfortably.
It’s tough being an immigrant in KSA and nearly impossible to get citizenship. There are people living here their entire lives with no nationality. They have been gone so long from their home land that they've lost citizenship there or were born in KSA and can’t become a citizen because there are not truly Saudi. Every day on my way out of the DQ I pass the Pakistan Embassy and everyday dozens of people are lined up in front waiting to get in. Pakistanis make up 10% of the expat population here. On my way out of the gate there are so many foreigners walking onto the DQ, obviously to get to their country embassy to renew their passport, apply for iqama or to retain their Saudi visa.
Currently, expats make up about a third of KSA’s 32 million population. Syrians & Indians are the largest groups expat workers, accounting for 23% and 14% respectively. Interestingly, Westerners are only 1% of the population. In late June it was announced that starting this year an expat tax is going to be mandated, 100 SAR a month per family member for those working in the private sector. The tax will increase 100 SAR/month, each year until 2020, when it will cap at 4,800 riyals per dependent annually.
Almost 80% of the foreign workers have a monthly salary of less than 2500 SAR. As mentioned in a previous post, 20% of the population lives below the poverty line of $480, or 1800 SAR/month. Factor in the average number of people per non-Saudi household, which was 4 in 2012, and that’s not much for a family to live on.
Putting all of these numbers into perspective, in 2017 a single expat will have to pay 1200 SAR annually for this tax. If he’s earning the high end of what expats earn (30 000 SAR annually), that’s 4% of his annual salary. And if he has an average family of four, the tax jumps to 4800 SAR or 16% of his salary. And by 2020 that tax will quadruple to 16% for a single or 64% for a family of four! Who could afford to stay or keep their family here?
This is Saudization. Basically it’s an initiative to reduce the country’s dependence on foreign labor, replacing expats with Saudis in the workforce. Saudis only make up 40% of the workforce. Different tactics have been tried for the last decade to decrease the number of foreign workers, unsuccessfully. The primary reasons for this new attempt of Saudization is the high youth unemployment rate, a growing population and diminishing oil revenues.
The issue for the private sector is that Saudi employees are far costlier than their foreign counterparts, in terms of salary as well as efficiency. In previous Saudization efforts there was a massive gap in the labor force because Saudis do not want to work those jobs. And it’s thought that the same problem will occur again. My father once said, when we were discussing how common it is for people in the US to have a college degree, "Someone still has to take out the trash." Meaning that the need for labor jobs will still exist and someone has to fill those roles. Currently the private sector makes up about 40% of the kingdom’s GDP. And according to Vision 2030 there is going to be an effort to shift some of the government sectors to private. This means that either the kingdom will be getting even more money from this tax, or more expats will be forced to leave as they won’t be able to pay it and subsequently there could be an even larger gap in the labor force.
It also means higher costs that people are paying for services if a Saudi is completing the job vs. an expat, such hiring a plumber or getting a cracked phone screen repaired. A foreign worker might charge half of what a Saudi would in either of these fields. And in the corporate environment it's pushing expats out. One of the new Embassy drivers is Yemeni, but he’s lived in KSA since he was a young child. He used to be an Account Manager at STC, in the B2B Division. He looked for a new job because he knew he would never be paid a fair wage, the wage that’s paid to Saudis.
Expats are already starting to leave the country. With school just starting back up in the Kingdom I’ve been told that already there are less children at some of the international schools as their families can’t afford to stay. I was speaking with my workmates and they saw this latest wave of Saudization coming. A number of them have already sent their wives and children back home.
So it seems that Saudization is starting to work. I can understand the desire to take care of the citizens of its’ country, but I don’t believe pushing people out or trying to make money off them is the appropriate way to boost the economy. And reverting back to a homogenous country make-up is not progressive or representative of the modern kingdom that Vision 2030 touts. Sadly, it sounds like Nationalism. What remains to be seen is if there will be enough willing people to fill the labor jobs needed to grow the economy. Just being born in a country doesn't make anyone entitled to a cushy corporate job, live in a palace and drive a G-Class. More so, in the case of an emerging market like KSA, there needs to be workers to lay the roads, build the skyscrapers, construct the tracks for the metro, landscape the palaces, and take out the garbage.